Is it a good time to refinance your reverse mortgage? Did you know that you can refinance a reverse mortgage? You can and the timing depends on the housing market and your current need. The main reason people refinance is to access more money from their homes equity as it grows. When you fund your reverse mortgage the amount you are allowed to access depends on your homes current market value. After 18 months you are allowed to reassess to see if the value has risen enough that a refi may be a smart thing to do. Sometimes there is no need. You may also have gotten married and need to add a spouse to the loan, you can also refi for that reason. Some refi simply because they have an older reverse that does not let them capitalize on their current value but it may also have things like a monthly servicing fees which are usually no longer sold. Lenders have a litmus test they use to see if they will let you refinance, they want to make sure there is a benefit to the client and not just to the loan officer who will be making a commission.
Changes to the reverse refi may be on the horizon. Several people are taking advantage of their higher home values and are doing refinances all over the country, investors don’t like it. For the purposes of understanding we will call the reverse mortgage by its true name a Home Equity Conversion Mortgage or HECM for short. When these investors purchase securities backed by HECM’s just like any other mortgage backed security they expect it to have a certain lifespan; one average about 7 years. With values going up as quickly as they are nationwide people are refinancing as soon as they are allowed to which is every 18 months. Investors don’t like that as it causes the investment to turn over far too quickly. Investors have told lenders to do something to slow down the refinances. Some lenders have already taken action by lowering the amount of commissions loan officers get on a HECM to HECM refi. So how does a lower commission for a loan officer translate to you as a borrower? A loan officer making less means two things, one is they will seek out the refi business less so and this means many may not be kept informed and may not even know they can refi, secondly it lowers their ability to offer broker/lender credits to offset closing costs. Loan officers can often waive some or all of the closing costs involved in a refi because there are already less fees since the bulk were paid the first time around (ie mortgage insurance premium) and payoff amounts are normally higher which means a higher commission for the loan officer and more ability to offer higher credits.
So is it a good time to refinance your reverse mortgage? It would seem so with home values where they are and the looming possibility of the refi being less desirable. How do you know what is going on with your value or how much you could save on the closing costs depending on that payoff amount etc? The best way is to call me with these questions. I have been doing reverse mortgages exclusively for 10 year and have been in the mortgage industry as a whole for 20 so I have the unique ability to tell you if the reverse is right or wrong while saving you money. I pride myself of beating the competition and creating a smooth customer experience. The bulk of my business still comes from former clients referring friends and family. I offer a pressure free approach and close faster than my competition all while saving you as much as possible. Contact me today for find out more. I look forward to hearing from you.